On June 7, Axios journalist Chris Matthews wrote a piece “Big Companies, Fewer Workers” that said:
The five most valuable companies in the U.S. are all technology firms that employ far fewer workers than their industrial predecessors.
He echoes a common complaint. But is it really true?
I decided to compare employment at today’s most valuable tech/telecom companies with employment at the most valuable industrial giants of the past. My point of reference is 1979, the all-time peak year for manufacturing employment in the United States. At the end of 1979, these were the top 10 industrial companies (ordered by market cap), and their total employment.
|Table 1: Top 10 Most Valuable US Industrial Companies, 1979*|
|Johnson & Johnson||72|
|Data: Siblis Research , corporate annual reports, Progressive Policy Institute|
So as of 1979, the ten most valuable U.S. industrial companies had a total employment of 2.2 million.*
By comparison, I took today’s most valuable tech/telecom companies, ordered by market cap as of June 10. Here’s the list, plus their total employment.
|Table 2: Top 10 Most Valuable US Tech/Telecom Companies, 6/10/2017|
|Data: Annual reports, PPI|
So the ten most valuable US tech/telecom companies today employ 1.5 million workers, roughly two-thirds as many as the 2.2 million employed by the ten most valuable US industrial companies in 1979.
However, a look at the two lists shows something interesting: Take General Motors out of the 1979 list, and the size distribution in 1979 doesn’t look that much different than the size distribution in 2017. Industrial leaders such as Kodak, Dupont and Xerox employed between 100K and 150K workers in 1979, roughly the same workforce as Apple, Microsoft, Verizon, Comcast, Oracle, and Intel today. GE and IBM in 1979 employed roughly the same number of workers as Amazon today. And Merck in 1979 wasn’t that much larger than Facebook today.
Conclusion: In terms of employment, the major difference between the industrial giants of 1979 and the tech/telecom giants of 2017 is one superstar company, General Motors, whose 1979 workforce dwarfed any other company on either the 1979 or the 2017 list.
To be continued…
*My definition of ‘industrial’ includes non-energy manufacturing companies. The 1979 list should include Procter and Gamble, but I could not locate their employment data in their annual report. There’s no reason to think that substituting P&G for J&J would make a significant difference in the list. Ford Motor’s stock price underwent a steep plunge in 1979 that took it out of the top 10 industrial companies by market cap.